Road toll nightmare looms

Minister of Transport Sibusiso Ndebele faces a number of tough challenges this year, in providing a proper playing field for those engaged in land-based freight and passenger transportation. While solving the toll road issue is the most urgent in order to prevent a national strike in February, it is merely one of a multitude of challenges.

The transport sector is a key demand-driven input sector that has been identified by all economic policy trajectories as one of the drivers of economic growth. The sector has important spillover effects that affect the entire economy. An improvement in transport decreases the input costs of industry, which in turn improves production costs and reduces inflationary pressures.

Overdue now is a transformation within the land-based freight transportation sector. Until the early 1990s, road freight played second fiddle to the railways, which had become the preferred freight transport mode through the notorious permit system.

Some road freight companies became big, simply by acquiring companies or small transport enterprises that had been granted permits; and they became even bigger during the long deregulation process, through achieving better economies of scale and higher profit margins.

They mushroomed also as a result of the closure of railway branch lines, lack of maintenance of the remaining rail infrastructure and rolling stock since the ‘80s, and the deterioration of service levels.

It is common cause that this led to an improper balance of more than 80% of general freight being transported by road, which is more expensive; and the rest by rail, which should be a cheaper alternative .

Major transport companies now dominate the industry with tariffs that pose a barrier to new entrepreneurs – or small, medium and micro enterprises (SMMEs) – entering the road freight transport industry. Many still try to do so with unsustainable tariffs, vehicles that are unroadworthy, and drivers who are unskilled, reckless and probably underpaid.

The Department of Transport (DoT) therefore faces four major challenges with regard to the road freight transport industry:

The first challenge is to seek a balance on the so-called road versus rail issue, with the implementation of the National Freight Logistics Strategy that seeks to put freight – which traditionally should not be carried by road – back on rail; and the National Transport Master Plan 2050 strategy, which is “to create capacity ahead of demand through developing a dynamic, long-term land use or multimodal transportation systems framework for the development of network infrastructure facilities, interchange termini facilities, and service delivery”.

It is further expected to affect regional integrated transport plans such as the one being drawn up for Gauteng.

From a railway point of view, this is going to be a time-consuming and costly exercise for Transnet Freight Rail (TFR) as it tries to recapture the freight it has lost to the road freight industry. In this regard, TFR has offered its branch lines to be operated in public-private partnerships with stakeholders in the supply chain industry in the hope that many of these unprofitable lines can be used in a bimodal setup that should help reduce the cost of logistics.

The second challenge is to empower those already in the industry through the Transport Sector Broad-Based Black Economic Empowerment Charter, by providing them with a greater equity share in the industry, accompanied by increased skills transfer so that the imbalances of the past can gradually be removed. Here we also look at the removal of the tariff barrier that prevents new entrepreneurs from entering in this sector.

The solution would be by way of subcontracting SMMEs and owner drivers, through job creation and mapping out a proper career path for school-leavers. The latter should make the industry more attractive to new entrants than it is at present.

The third challenge is to provide and maintain a national and secondary road infrastructure to facilitate both public and road freight transport while containing the cost per kilometre of moving people and goods.

As with rail infrastructure, the government has committed itself to spending billions of rands on new or improved national road and freeway infrastructure such as that for the Gauteng Freeway Improvement Project (GFIP), the Cape Winelands and Wild Coast Routes; as well as for a shorter and safer alternative to the crash-prone Van Reenen’s Pass on the main export/import corridor between Durban and Gauteng.

It is a worldwide trend to fund costly improvements and extensions to national road infrastructure via the “user pay” principle, which means the tolling of certain road sections.

The Road Freight Association (RFA) has indicated that it does not object to the implementation of that principle per se, but to the “severity” of the e-tag tariffs to be charged. Along with other business organisations, it has requested the establishment of a separate fuel levy and a ring-fenced fund to finance toll road improvements and extensions.

Following strong objections from other organisations – including labour unions – for the complete abolishment of tolling, and these new road modifications and extensions, Ndebele has requested the incoming board of directors (1 December 2011) of the South African National Roads Agency Limited to prioritise the resolution of the financing model regarding the cost of GFIP Phase 1, amounting to R20bn.

This will be complementing other processes on the matter under way i.e. the Ministerial Task Team appointed by Cabinet and the planned public consultative processes, during 2011/2012, which will seek to come up with viable funding options for the improvement of road infrastructure in the future and the servicing of the debt with regard to GFIP Phase 1.

Meanwhile, all the other projects, including GFIP Phase 2, have been put on hold.

It is imperative that all parties concerned, including the RFA, take advantage of the planned consultative processes and share with the government their views on how South Africa could fund better road infrastructure without increasing the cost of logistics and hurting the pocket of the consumer.

The government is now well aware of the fact that the country’s secondary road network has been decaying over many years due to a severe lack of maintenance. To this end, the DoT extended the S’hamba Sonke Roads Programme, which Ndebele initiated as a former KwaZulu-Natal MEC for Transport.

S’hamba Sonke is the result of the DoT’s plea to President Jacob Zuma for dedicated funding for road maintenance. It started for the first time on 1 April 2011 with an amount of R6.4bn, R7.5bn for the 2012 financial year and R8.2bn by 2014 – totalling over R22bn by 2014. This amount is a conditional grant dedicated to road maintenance, and the DoT has to report on a quarterly basis to National Treasury on the performance of this grant.

The fourth challenge is the matter of road safety, which has reached national crisis proportions.

Ndebele has been chosen as the Southern African Development Community (SADC) Regional Road Safety Champion. Ministers launched the SADC Decade of Action for Road Safety in support of the United Nations Decade of Action for Road Safety 2011–2020, and approved the Draft SADC Road Safety Awareness Campaign Strategy and Action Plan 2011–2014.

With more than 1 200 people having died in road accidents in South Africa over December 2011, it can be expected that law enforcement will further increase, particularly with Easter coming up.

As the taxi industry, the road freight industry has an appalling track record as far as road crashes are concerned. These crashes are due to a variety of factors including bad driving skills, long driver hours, overloading, and badly maintained vehicles.

Implementation of the full Road Transport Quality System, which was a prerequisite for deregulation anyway, as well as the points demerit system, may well be Ndebele’s next step to combat the slaughter.

Another positive step is that, in conjunction with the Department of Basic Education, road safety education is now being introduced at schools as part of the lifeskills curriculum, to help Grade 11 pupils acquire learner’s licences and Grade 12 pupils their driving licences.

This could be the first step toward a career in the road transport industry as well, if the road freight industry were to take steps to improve professional driver training and make the profession more attractive to school-leavers. After all, the DoT, together with the South African National Taxi Council, launched the Transport Training Academy in the Free State in October last year to improve the skills and capacity of taxi operators, drivers and general staff within the industry, and thereby provide an excellent service to all customers.

The DoT and the road freight industry should further explore the academy route, as the latter’s dependence on driver training service providers is obviously not producing the desired result.

Among other important challenges are the need for smoother bidirectional trade and traffic flows between South Africa and neighbouring countries through one-stop border posts, and lower cross-border permit fees that have seen extraordinary increases.

There are many other road freight issues that have to be addressed. In this regard, when he addressed the 2011 RFA Convention last year, Deputy Minister of Transport Jeremy Cronin expressed the need for regular monthly meetings between senior DoT and RFA officials. It is hoped the latter will take up that challenge and, in the process, become even more representative and therefore speak with one voice for the entire industry as we drive into a better future for all.

Andy Cole